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INVENTORY MANAGEMENT

If the production rate in an economic production lot size model is very much larger than the consumption rate, the results are practically the same for economic production lot size and EOQ.

 True
 False

ABC analysis divides an organizations on-hand inventory into three classes based upon

 unit price.
 annual dollar volume.
 annual demand.
 the number of units on hand.

Monitoring the temperature of tomatoes during shipment would best be done using:

 ROP
 GPS
 Universal Product Codes (UPC)
 Bar codes.
 RFID tags

In a two-bin inventory system, the amount contained in the second bin is equal to the:

 safety stock
 EOQ
 optimum stocking level
 amount in the first bin
 ROP

Extra units that are held in inventory to reduce stockouts are called

 demand variance.
 reorder point.
 safety stock.
 just-in-time inventory.

Fixed-order quantity models are:

 Fixed for a specified time period
 Event triggered
 Time triggered
 Made up of a variable order size

For a company that manufactures most of its products as standards, more inventory should be placed

 close to suppliers.
 closer to the customer.
 equally distributed between the plants and warehouses.
 within the plant as work-in-process.

Policies based on ABC analysis might include investing

 the most time and effort verifying the accuracy of records for B items.
 extra care in forecasting for C items.
 more in inventory security for C items.
 more in supplier development for A items.

Which of the following is NOT a type of inventory?

 MRP
 work-in-process
 raw material
 finished goods

Which of the following inventory systems would be most appropriate in controlling many items ordered from the same vendor?

 Fixed Order Quantity System
 Fixed Time Period System
 Materials Requirements Planning System
 One Period Inventory Model Using Marginal Analysis

Most inventory models are made based on:

 Cost minimization
 Optimum influence on demand
 Profit maximization
 Minimizing setup times
 Minimizing lead time

Inventory record accuracy would be decreased by

 ABC analysis.
 cycle counting.
 increasing stockroom accessibility.
 reorder points.

With the quantity-discount model, an order level might not be at a minimum point of a total cost curve.

 True
 False

Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?

 Partial receipts are allowed.
 Uncertainty in leadtime may not exist.
 Annual holding cost, annual purchasing cost and annual delivery costs are the relevant costs in the
 Quantity discounts can occur and taken into account in the total cost calculations.

What items do students typically buy on an ROP basis?

 bran muffins
 textbooks
 wedding gifts
 computer software
 gasoline for car

In the basic fixed-order quantity model, if annual demand doubles, the effect on the Optimal Order Quantity (EOQ) is:

 it doubles
 it is about 70% of its previous amount
 it is half its previous amount
 decreases by a factor of 2
 it increases by about 40%

The goal of ABC analysis is to

 determine the profitability of items.
 estimate average volume per dollar value.
 to identify the A items for better inventory control.
 estimate dollar value per pound.

The Basic EOQ model ignores:

 Ordering costs
 A items
 Holding costs
 B and C items
 Purchasing costs

In the basic Q model, if the lead time doubles, the EOQ will:

 double
 remain the same
 none of the above
 decrease by half
 increase, but not double

Space considerations are not included in any of the economic ordering models.

 False
 True

If both the lead time and daily demand are constant (no variation), the ROP is equal to:

 Expected demand minus safety stock.
 Safety stock
 Daily demand times lead time.
 Expected demand plus safety stock.

Which one of the following statements is best?

 In a fixed interval system, the value of Q is kept the same from one cycle to another.
 A fixed interval system requires more safety stock than a ROP system.
 A fixed interval system requires more administrative control and computer support than does a ROP sy
 A fixed interval system lends itself more to quantity discounts than does a ROP system.

Reorder point models are primarily used for independent demand items.

 False
 True

A system that triggers ordering on a uniform time basis is called a

 EOQ.
 reorder point system.
 fixed-period system.
 fixed-quantity system.

The two most important inventory-based questions answered by the typical inventory model are

 how many of an item to order and what is the cost of this order.
 how many of an item to order and with whom the order should be placed.
 when to place an order and what is the cost of the order.
 when to place an order and how many of an item to order.

A firm producing medical equipment to customer specifications is most likely using a

 assemble-to-order strategy.
 make-to-order strategy.
 mass production strategy.
 make-to-stock strategy.

One use of inventory is

 to ensure that item cost is maximized.
 to tightly link a firm s production with its customer s demand.
 to provide a hedge against inflation.
 to tightly link production and distribution processes.

The difference(s) between the basic EOQ model and the production order quantity model is (are) that

 the production order quantity model does not require the assumption of instantaneous delivery.
 there are no holding costs in the production order quantity model.
 A. the EOQ model does not require the assumption of known, constant lead time.
 the production order quantity model does not require the assumption of known, constant demand.